The High Court
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI Criminal Revision No. 1380 of 2016 Satyaban Roy son of Late Satyandra Kumar Roy, Resident of Baramuri O.C.P., Mugma Area, E.C.L., P.O. and P.S.-Chirkunda, District- Dhanbad. … … Petitioner -Versus- 1. State of Jharkhand 2. Mr. Pradeep Kumar Ghosh Rai, S/o Late Bishwanath Ghosh Roy, Income Tax Officer, Ward No. II(4), MADA Building P.O. and P.S. Dhanbad, District:- Dhanbad … … Opposite Parties --- CORAM:HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY For the Petitioner For the Income Tax Deptt. : Mr. Anurag Vijay, Standing Counsel --- :Mr. Tarun Kumar, Advocate : Mr. Omprakash, JC to SC, ITD : Mr. Srijan Pandey, Advocate --- 14/20.09.2024 Heard the learned counsel for the parties. 2. This criminal revision petition has been filed challenging the judgment dated 05.07.2016 passed by the Additional Sessions Judge XIV Dhanbad in Cr. Appeal No. 37 of 2016 whereby the appeal has been dismissed. The petitioner has been convicted vide judgement dated 12.02.2016 passed by Special Judge (Economic Offences), Dhanbad in C.O. Case No. 20 of 2005 under Section 278 of the Income Tax Act and sentenced to undergo rigorous imprisonment for two years and to pay fine of Rs.5000/- and in case of default, further sentenced to undergo rigorous imprisonment for one month. Argument of the petitioner 3. The learned counsel for the petitioner submits that the judgments passed by the courts are perverse and they called for interference. He submits that as per the allegation, the petitioner was said to have abetted one Munilal Devi to file false return for the assessment year 2003-04 and claim refund of Rs.53,760/- by 1 disclosing housing loan and by filing form 16A allegedly issued by LIC, Chirkunda Branch through TDS certificate. All the documents relating to refund of income tax filed by Munilal Devi were found to be forged, but the petitioner has been convicted as an abettor of the offence committed by Munilal Devi. 4. The learned counsel submits that the conviction of the petitioner has been made solely on account of the reason that Munilal Devi had disclosed to the Income Tax Department in her show cause reply that it is the petitioner who had abetted her to file false return.
Legal Reasoning
The learned counsel submits that another circumstance which has been used against the petitioner is that the petitioner did not respond to the show cause notice (Exhibit-7). 5. The learned counsel has further submitted that the learned trial court has taken a view that non-examination of Munilal Devi in the case has no bearing in the matter and it does not affect the credibility of her reply which was marked as Exhibit-6. The learned court has also observed that Munilal Devi could have been examined even by the accused in order to falsify her reply, but nothing was done on behalf of the accused (petitioner). 6. The learned counsel has submitted that non filing of reply to the show cause cannot be used against the petitioner to convict the petitioner for offence under Section 278 of Income Tax Act for abetting filing of false return by Munilal Devi. 7. The learned counsel submits that the conviction of the petitioner cannot be sustained even by the aid of section 278 E of the Income Tax Act, 1961. Argument of Income Tax Department 8. The learned counsel appearing on behalf of the Income Tax Department while opposing the prayer has submitted that there are two courts who have held the petitioner guilty. There is no scope for re-appreciation of materials and coming to a different finding in absence of any material irregularity and perversity. He has referred to the judgment passed by the Hon’ble Supreme Court in (2011) 12 2 Tax.com 67 (SC) Income Tax Officer Jind v. Mangat Ram Norata Ram Narwana and another and has submitted that the presumption under Section 278 E of the Income Tax Act has been rightly utilized against the petitioner. He has also submitted that Munilal Devi could not have been examined as she was a co-accused in connection with the same transaction of filing of false return, although she was convicted in another Complaint case. Findings of the Court 9. After hearing the learned counsel for the parties and considering the facts and circumstances of this case, this Court finds that admittedly Munilal Devi was having a PAN number and was an assessee within the meaning of Income Tax Act, 1961 and she had filed her return for the assessment year 2003-04 along with TDS certificate claimed to be issued by LIC of India and also showing repayment of housing loan and claimed refund of Rs. 53,760/-. These documents produced for claiming refund were found to be forged and a show cause notice was issued to her. She admitted her signature in the verification portion of the return and disclosed the name of the present petitioner and stated that she had handed over the return duly signed by her to the petitioner. She also stated in the show cause reply that the information furnished with the return were fabricated and managed by the petitioner. She also stated in the show cause reply that she is an illiterate lady. The petitioner was issued show cause in this connection but he did not file any reply. 10. On the basis of the complaint filed, the complainant had examined 2 witnesses before the courts and the documents mentioned below were exhibited. The exhibited documents included a certified copy of the judgment dated 29.05.2014 in Criminal Appeal No. 49 of 2014 passed by the Learned Sessions Judge, Dhanbad convicting Munilal Devi for the offence under section 277 of the Income Tax Act. The various documents exhibited included the show cause notice dated 17.06.2004 said to have been issued to the petitioner and it was asserted that the petitioner did not respond to the show cause notice. 3 The learned trial court scrutinized the materials on record, including the following documents: Sl. No. Exhibits Description 1. Exhibit-1 Order dated 18.01.2005 sanctioning prosecution of the accused passed by the Commissioner of Income Tax Department, Dhanbad. 2. Exhibit-2 Certified copy of the Judgment dated 29.05.2014 in Cri. Appeal No. 49 of 2014 passed by the learned Sessions Judge, Dhanbad. 3. Exhibit-3 Income Tax Return submitted by the assessee namely Munilal Devi for the assessment year 2003-04. 4. Exhibit-4 Copy of letter dated 7th October, 2003 issued by the Income Tax Officer Ward-II (4), Dhanbad to the Branch Manager, Bank of India, Chirkunda regarding holding of A/c No. 1263 of Munni Lal Devi. 5. Exhibit-4/1 Certified copy of letter dated 13.10.2003 issued by the Manager, Bank of India, Chirkunda Branch, Dhanbad to Sri S.K. Mitra, Income Tax Officer, Ward No. II(4), Dhanbad regarding the housing loan account of Munilal Devi. 6. Exhibit-5 Copy of letter dated 7th October, 2003 issued by the Income Tax Officer Ward-II(4), Dhanbad to the Branch Manager, L.I.C. of India, Chirkunda Branch for information in relation to Muni Lal Devi. 7. Exhibit-5/1 Copy of reply dated 13.10.2003 issued by the Branch Manager, L.I.C. of India, Chirkunda Branch to Sri S.K. Mitra, Income Tax Officer, Ward-II(4). 8. Exhibit-6 Reply to show cause notice submitted by the 4 Muni Lal Devi to the Income Tax Officer, Range-II Ward-2, Dhanbad. 9. Exhibit-7 Show Cause notice dated 17.06.2004 to the accused. 10. Exhibit-8 Complaint petition of the present case bearing C.O. Case No. 20/15. ‘X’ for identification-Photocopy of show cause notice to Munilal Devi issued by Income Tax Officer, Ward-II (4), Dhanbad. 11. The defence did not lead any evidence. The petitioner was in complete denial in his statement recorded under section 313 of Cr.P.C. All the documents relating to refund of income tax filed by Munilal Devi were found to be forged, but the petitioner has been convicted as an abettor of the offence committed by Munilal Devi. 12. The learned trial court while convicting the petitioner has relied upon the show cause reply filed by Munilal Devi. The learned court held as under:- “14……………….The assessee namely Munilal Devi’s reply to the Income Tax Officer as contained in Exbt. No. 6 states that Satyaban Ray had done all those things with her income tax return. She has stated in her aforementioned reply that she had given blank return form with her signature thereof to Satyaban Ray and Satyaban Ray had done the alleged mischief. The income tax return of Munilal Devi bears her signature upon the verification part thereof. This shows that the assessee namely Munilal Devi was abetted by the present accused in filing her false income tax return for the Assessment year 2003-04. So far as non-examination of assessee namely Munilal Devi is concerned, it does not affect credibility of her reply as contained in Ext.6.It could have been done even by the present accused in order to falsify her reply, but nothing as such has been done by or on behalf of the present accused.” 13. Thereafter, the learned trial court referred to Section 278 of the Income Tax Act which deals with offence regarding Abetment of false return etc and was of the view that the case of the petitioner falls 5 under the 3rd clause and explanation of section 107 of the Indian Penal Code and ultimately held as under after quoting the provision of section 278 of the Income Tax Act. :- “15. As the accused has been charged for the offence u/s 278 of Income Tax Act,1961, it reads as it follows; Section 278- Abetment of false return etc.- If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income (or any fringe benefit) chargeable to tax which is false and which he either knows to be false or does not believe to be true or to commit an offence under sub section (1) of Section 276C, he shall be punishable – (i) in a case where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true or which is wilfully attempted to be evaded, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months, but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months, but which may extend to three years and with fine. 16. Abetment of a thing has also been narrated u/s 107 of the Indian Penal Code which reads as it follows - Abetment of a thing – A person abets the doing of a thing, who – First – Instigates any person to do that thing; or Secondly – Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy and in order to the doing of that thing; or Thirdly – Intentionally aids, by any act or illegal omission, the doing of that thing. Explanation – A person who by willful misrepresentation or by willful concealment of a material fact which he is bound to disclose, voluntarily causes or procures or attempts to cause or procure, a thing to be done, is said to instigate the doing of that thing. The present act of the accused definitely falls into third clause and explanation of Section-107 of the Indian Penal Code. Accordingly, the discussions over the evidences on record in support of charge against it abundantly clear that the present accused had abetted the assessee namely Munilal Devi and had filed her false Income Tax Return for the Assessment year 2003-04. The same falls within the ambit of Section 278 of Income Tax Act, 1961 as reproduced herein above, making the same to be punishable. Furthermore, there is presumption of culpable mental state against the accused assesse u/s 278 E Income Tax Act, 1961. the present accused make 6 This presumption is in the nature of “shall presume” which is not of weaker type unlike “may presume”. This presumption has to be rebutted by the present accused that he had no such mental state with respect to the charge. The same has not been rebutted at all by the present accused. Hence, the submission advanced on behalf of the present accused that existence of mens rea is a sine qua non for prosecution of the accused in the instant matter, is hereby discarded. The same finds force in a judgment reported in (2014) 1 BBCJ (S.C.) 222 and 2015 CRI. L.J.S.C. 4767 also.” 14. The appellate court upheld the conviction of the petitioner after considering the materials on record and held as under: - “11. In this way from the oral testimonies of both the prosecution witnesses, I find that they have simply brought all the relevant documents on the basis of which this case has been lodged against the accused/appellant and the case in hand depends mainly upon these documentary evidences as the appellant has been booked for abetment of filing false return by the assessee Munilal Devi for the assessment year 2003 04 which he knew to be false. In this context the prosecutrix Income Tax Department has filed the return of said Munilal Devi of the year 2003 04 as Exhibit 3 through which she has made a claim of Rs. 53,760/ as refund on different grounds of her working as LIC agent and proceeds under home loan which on verification by the Bank as well LIC of India found to be false in support of which the prosecution has filed the Exhibit 4/1 and Exhibit 5/1. Accordingly, the said assessee Munilal Devi was asked to explain why not proceeding U/s 277 of the Income Tax Act being initiated against her. Connecting show cause filed by the prosecutrix is Exhibit 6. Ultimately on the basis of her show cause she unfolded the role of appellant Satyaban Rai who according to her managed and fabricated her return for the said refund from the Income Tax Department for which he was ultimately served show cause notice for initiation of prosecution U/s 278 of the Income Tax Department which was received by him on 17 06 04 as Exhibit 7 of the prosecution reveals. Apparently from all the aforesaid documents the said Munilal has been found to have claimed a refund on the basis of false information and documents and as per her show cause all these affairs were managed by Satyaban Rai and the basis of her claim as LIC agent and on home loan proceeds all were in the full knowledge of the accused/appellant thereby fulfilled the basic requirements of abetment of thing defined U/s 107 of the I.P.C. which goes under: Abetment of a thing A person abets the doing of a thing who- First Instigates any person to do that things; or Secondly Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy and in order to the doing of that thing; or 7 Thirdly – Intentionally aids, by any act or illegal omission, the doing of that thing. Explanation A person who by willful misrepresentation or by willful concealment of a material fact which he is bound to disclose, voluntarily causes or procures or attempts to cause or procure, a thing to be done, of that thing. It would not be out of place to refer the Exhibit 2 filed by the prosecution regarding conviction of said Munilal Devi for the offence in question which was abetted by the appellant till the first appellate stage vide Criminal Appeal no. 49/14 dated 29 05 14. 12. Thus appreciating the status of the assessee in question Munilal who is lady and an illiterate one the role of the appellant as per her show cause confirms thathe facilitated the commission of the original offence i.e. filing of the false return by annexing forged documents duly procured by them with a return in order to claim refund. Further he kept mum after receiving the show cause notice from the income tax department nor even furnished any defence at the time of trial. As the instant nature of the case involving economic offences primarily depend upon documents, the guilt of the appellant is found to be well proved”. 15. This Court finds that arising out of filing of return for the assessment year 2003-04 of the assessee namely Munilal Devi, two complaint cases were instituted by the Income Tax Department. The allegation was that the assessee Munilal Devi had filed false return claiming refund of income tax based on forged and fabricated documents. One against Munilal Devi bearing C.O. Case No. 31 of 2004 wherein she was convicted vide judgment of conviction and order of sentence dated 27.03.2014 for offence under Section 277 of the Income Tax Act and her conviction was confirmed vide judgment dated 29.05.2014 passed in Criminal Appeal No. 49 of 2014 (Exhibit 2). The other case was instituted against the present petitioner for abetment in filing false return by Munilal Devi under Section 278 of the Income Tax Act allegedly abetting Munilal Devi to commit offence under Section 277 of the Income Tax Act. 16. This Court finds that before the learned trial court, the prosecution had produced all the documents relating to return of Munilal Devi including her response to the show cause issued by the Income Tax Department wherein she claimed that she had put thumb impression on blank form of income tax return and handed over to the 8 present petitioner who had approached her to file return as was normally done and denied having any knowledge about filing of false return on the basis of forged and fabricated documents and she asserted that she had never advised the petitioner to do such an illegal act. The learned trial court considered the show cause reply (Exhibit 6) filed by Munilal Devi. 17. So far as the petitioner is concerned, the petitioner had not filed any reply to the show cause issued by the Income Tax Department prior to launching of the prosecution. The learned trial court convicted the petitioner primarily on the basis of the show cause reply filed by Munilal Devi and stand taken by her in the show cause reply. When the petitioner raised the point regarding non-examination of the assessee namely Munilal Devi, the learned trial court was of the view that non-examination of Munilal Devi as a witness did not affect the credibility of her reply to the show cause (Exhibit-6). The learned trial court was of the view that the examination of Munilal Devi could have been done by the petitioner in order to falsify her reply, but nothing as such was done on behalf of the petitioner. 18. So far as the appellate court is concerned, upon perusal of the appellate court’s judgment, this Court finds that the appellate court has not considered this aspect of the matter and has upheld the conviction of the petitioner by referring to the evidences. The appellate court did not record the submissions of the respective parties in the judgement. The appellate court has not considered the consequences of non- examination of Munilal Devi. 19. This Court is the considered view that for convicting a person for the offence under Income Tax Act, the foundational fact is required to be proved by the prosecution. The entire case of the prosecution was based on the stand taken by Munilal Devi in her reply to show cause throwing entire burden on the petitioner, but Munilal Devi was not examined as a witness which would have enabled the petitioner to cross examine Munilal Devi. The reply to the show cause filed by Munilal Devi claiming innocence has been the basis to 9 convict the petitioner and the same reply has been found to be not acceptable while convicting her in another complaint against which appeal has been dismissed vide exhibit-2. Non-examination of Munilal Devi has a serious bearing in the case. The argument of the opposite party, Income Tax Department, that Munilal Devi could not have been examined as she was a co-accused in connection with the same transaction is not acceptable as Munilal Devi was not to depose against herself, but was to depose in support of her stand taken in her show cause reply and she was not a co-accused in the same complaint case and was already convicted in a different complaint case in connection with the same refund. This Court is of the considered view that under the aforesaid circumstances, it cannot be said that the prosecution has proved the foundational facts of abetment of Munilal Devi by the petitioner. While dealing with the plea of non- examination of Munilal Devi, the learned trial court observed that so far as non-examination of assessee namely, Munilal Devi is concerned, it does not affect credibility of her reply as contained in Ext.6. This Court is of the considered view that such a finding is perverse in as much as the credibility of reply of Munilal Devi could be tested only upon her examination and cross-examination. Further, the finding of the learned trial court that the petitioner ought to have taken steps for examination of Munilal Devi is also perverse as it was for the prosecution to establish the foundational facts on the basis of which the petitioner was to be prosecuted. 20. This Court is of the considered view that the foundational fact to bring home the charge against the petitioner for abetting filing of false return by Munilal Devi was not proved by the prosecution. Accordingly, presumption in terms of Section 278 E of Income Tax Act regarding presumption of ‘mens rea’ does not come into play. The role of presumption of ‘mens rea’ would come into play only if the foundational facts are proved by the prosecution beyond reasonable doubts. 10 21. The foundational fact was proved only to the extent that the return filed by Munilal Devi were based on forged and fabricated documents and that Munilal Devi had taken stand in her show cause reply giving the entire blame on the petitioner. This Court is of the considered view that the aforesaid fact was not sufficient to bring home the charge of abetment against the petitioner and consequently the petitioner could not have been convicted on the basis of presumption of ‘culpable mental state’, that is presumption of ‘mens rea’ by referring to Section 278 E of Income Tax Act. The fact remains that the same show cause reply was found not acceptable while convicting Munilal Devi in another complaint case and in this case, the same reply has been accepted to convict the petitioner. 22. The Hon’ble Supreme Court in the judgment passed (2011) 12 Taxcom 67 (SC) (Supra) has clearly held that once a person put signature on the verification form, he cannot wriggle out from his responsibility and the provisions of Section 278E comes into play. Such evidence is strong evidence against the maker, but he is at liberty to prove that such admission was mistaken or untrue. The Hon’ble Supreme Court has held as under: - “10.We have bestowed our thoughtful consideration to the submission advanced. True it is that PW 2 Desh Bandhu Goyal, who made the final assessment did not state in his evidence that the return was signed or verified by the accused Hem Raj in his presence. Further the witnesses, namely, Satish Kumar (PW 1), J.K. Sahni (PW 3) and Satish Luthra (PW 4) have not proved the signatures of Hem Raj. But this, in our opinion, would not be sufficient to throw out the case of the prosecution. The prosecution undoubtedly is to prove its case beyond all reasonable doubt to bring home the charge. The evidence for that purpose could be admission of the accused also. Here in the present case, the prosecution had led evidence to prove that the revised return was filed by the firm under the name of accused Hem Raj and on that basis assessment was made by the assessing authority. There is further evidence to show that aggrieved by the order of the assessing authority, an appeal was preferred before the appellate authority under the signature of the accused Hem Raj, which was dismissed and the penalty was paid. At no point of time accused Hem Raj made any objection 11 that the return did not bear his signature and was not filed by him. 11. It is trite that admission is best evidence against the maker and it can be inferred from the conduct of the party. Admission implied by conduct is strong evidence against the maker but he is at liberty to prove that such admission was mistaken or untrue. By proving the conduct of the accused Hem Raj in not raising any dispute at any point of time and paying the penalty, the prosecution has proved his admission of filing and signing the return. Once the prospection has proved that, it was for the accused Hem Raj to demonstrate that he did not sign the return. There is not statutory requirement that signature on the return has to be made in the presence of the Income Tax Authority. Nothing has been brought in evidence by the accused Hem Raj that the signature did not belong to him on the return and the penalty was paid mistakenly.” In the aforesaid judgment passed by the Hon’ble Supreme 23. Court, it was held that the prosecution undoubtedly had to prove its case beyond all reasonable doubt to bring home the charge and such evidence for that purpose could be admission of the accused also. In the said case, the prosecution had led evidence to prove that the revised return was filed by the firm under the name of the accused on the basis assessment was made, an appeal was also filed by the accused under his signature and at no point of time the accused made any objection that the return did not bear his signature or that it was not filed by him. It was in the aforesaid background the Hon’ble Supreme Court relied upon the presumption of ‘mens rea’ under section 278 E of Income Tax Act and allowed the appeal filed by the Income Tax Department and convicted the accused who was the assessee of the Income Tax Department. 24. This Court finds that in the aforesaid case before Hon’ble Supreme Court the prosecution had proved the foundational fact beyond all reasonable doubt and the Hon’ble Supreme Court has also observed that the prosecution undoubtedly has to prove its case beyond all reasonable doubt to bring home the charge. As discussed above, in the present case the prosecution has failed to prove the foundational facts beyond all reasonable doubt to bring home the 12 charge and accordingly there is no applicability to presumption of “culpable mental state”, that is ‘mens rea’ to convict the petitioner. 25. Considering the aforesaid facts and circumstances, this Court is of the view that the conviction of the petitioner cannot be sustained in the eyes of law and in order to secure the ends of justice, the impugned judgment of conviction and sentence of the petitioner under Section 278 of Income Tax Act is set aside. 26. Consequently, the petitioner is acquitted and discharged from the liability of his bail bonds. 27. Accordingly, this criminal revision is allowed. 28. 29. Let the original trial court records of the case be remitted to the Pending interlocutory application, if any, is closed. court concerned. 30. Let a copy of this order be communicated to the court concerned through ‘FAX/E-mail’. Rakesh/- (Anubha Rawat Choudhary, J.) 13